Dr Vino's wine blog

wine talk that goes down easy

One of the oldest and most dubious sales pitches in the wine trade might be “this wine comes from the vineyard right next to [insert prestigious winery name here]. Similar quality, a fraction of the price.”

Uh huh.

So it was with my eyebrow duly raised that I met with Cameron Hughes. He lures Costco shoppers down the aisle to try his wine by telling them that he’s got a “$30 wine for $9.99.” Based on some rhapsodic reviews of his wines on wine web sites, the claim sounded plausible enough to lure me to meet with him for a coffee one morning on his recent trip to New York City.

Hughes is not a wine maker. He is part wine finder, part marketer, and and part salesman. And he’s introducing an innovative way of making and selling wine that is delivering cost-savings to consumers in the form of some easy-drinking, value vino.

He honed his skills working for five years in the late 1990s at The Wine Group, a company that few wine consumers have ever heard of despite being the third largest in the US through brands such as Franzia, Corbett Canyon, and Glen Ellen. He sold the wines “from foxhole to foxhole” in the fragmented market that is New York.

But it wasn’t until he moved to California to work for an importer that he “learned how cheap this stuff actually is.” He said he saw the importer buying wine for $36 for a twelve-bottle case that ultimately sold for $18 a bottle in stores, or $216 a case. He investigated the California bulk market and found some cabernets that sold for $30 in a store actually cost the winery $4-$7.

So he went out on his own and tried to tap the wine glut and introduce efficiencies in the often flabby wine market. After a couple of years on his own, barely breaking even, he needed a new business model. A friend told him that he had a good syrah and wanted a retailer to sell it. Cameron shopped it to Trader Joe’s, known for selling great value wines, and later Safeway. Both declined.

Then he went to Costco. Cameron told me that the buyer “loved it and said ‘I’ll buy everything you’ve got.'” The wine was bottled as Cameron Hughes Wine Lot #1 Syrah and the 2,000 cases were sold entirely to Costco.

Now on Lot #30, the lot program is a huge success having sold 37,000 cases last year. What’s the secret?

Finding the right wines. Like J. Peterman in days of old, Cameron Hughes scours the world for exotica. He often finds his wine bargains in the “spot market” for fine wines. The wines he buys are often not good enough for the top blend for a winery. Or he buys the crop from a vineyard owner who otherwise would have their fruit lost as it upgraded a large blend. So he rescues them, saying “I’m a bird on the back of a hippo—a positive parasite.”

Because Cameron Hughes Wines is more efficient, with low overhead and bypassing various tiers, they can often pay a premium to rescue good juice. But he won’t say what it is though, since he buys the wines with the understanding of not revealing their sources. Thus Cameron Hughes is the brand, or as he put it to me, a “super brand.”

He called the major wine producers “strap-on marketing machines” who buy wine, bottle it, and ship it. He’s doing a similar thing but on a smaller scale, with higher-end wines, and greater efficiencies.

Selling direct. Cameron Hughes Wines are only sold in two places, Costco stores (in California and beyond) and directly over the internet. Even though the wines are fairly limited production, Costco—the largest wine retailer in the country—is still a great retailer for his wines, Hughes says, since the Costco shopper is used to the treasure hunt. Since Costco might have sport coats one day and flat screen TVs the next, it’s not hard to imagine the customers buying up all his wine.

And they did just that one weekend in the Danville, CA Costco where 1,000 cases of a new wine walked out the door. Many wine marketers, he told me, don’t like his enthusiastic hawking of his wines on the floor of the store since his actions are forcing them to ramp up staff ready to pour as well. It’s a great image that practically made me want to go to the Danville Costco to witness it myself—me, wine consumer, being serenaded in the aisles by wine marketers.

But the Costco shoppers don’t just pick up the wine on a whim. Cameron has cultivated a rich email database that alerts legions of his fans to new wines, available at Costco and through him. Even though Cameron Hughes Wines is a licensed distributor, they also have an internet-only retail license and can sell directly to consumers.

It’s disruptive. He says so. “But what’s good for the consumer is good for the wine business,” he said confidently.

* * * * *

So is there a Cameron Hughes style in the bottle? After our meeting in New York, he sent me some of his wine so that I could put them to the test in the glass. I would sum up the style to say the wines are reflective of their time. The reds are big and the whites are fruit forward. The wines represent some compelling wine values and even though I didn’t like them all, it’s definitely worth taking a flier on them—hey, it’s only ten bucks after all. We had some friends over and here are my thoughts:

Lot 23 Meritage 2002: This blend of Sonoma and Napa fruit aromas of maturing fruit, not young any longer but hugely enjoyable still. Rating: quickly emptied.

Lot 24: Excellent value Sonoma County syrah. One syrah-loving friend was quick to claim this bottle as his own. When he saw me pouring this bottle around to others, he encouraged me to instead leave it near him and pour Lot 27 to them. Rating: horded.

I am actually one of the reps for Cameron, selling wine in Costco. It is not at all “time share tactics” but a fun, albeit aggressive, way to get people to try the wine. The wines do speak for themselves, they are great values bringing everyday prices to really good wines. Give one of them a try, you will be pleasantly surprised

I’m confused. I hire aggressive salepeople to promote my wines just like everyone else in this business and you call it “time share tactics”? Maybe you don’t realize this but we can’t sample wine in Costco’s so we need people who are not wallflowers to communicate how we do what we do. I can’t for the life of me see the problem with that.

As for the comment “My Belief is that wine should sell itself”, I want to give you the benefit of the doubt and assume that you mean a wine should sell itself when it is tasted. I would agree with that.

If, however, you believe a wine should sell itself off the shelf and not be promoted or communicated in any way, then I disagree, as would just about anyone who has ever sold wine in this business. Quite frankly, I am a bit confused by the statement and wondered if you wouldn’t mind to clarify?

First if all thanks for taking the time to check us out and cover our business.

Secondly, a couple clarifications if I may. We are now selling in Costco’s in CA, AZ, TX, FL, NC, SC, AL, and IL and will soon be adding GA, VA, WA, OR, MI, MN, and hopefully, MA. The wines go in and out quickly so unless folks are on our mailing list at http://www.chwine.com they’ll never know (there are over $12,000 people that have signed themselves up on the list so we must be doing something right).

Also, the Marlborough SB is $11/bottle (though if you add shipping to NY it would be about $13 so fair enough). In CA Costco’s its $9 and, I think, a steal. If your customers want to try anything off our website they can use the coupon code “oscar” to get 50% off the shipping (enter the code on the left when you land on the store page).

I just had a clarification question, so is this similar to “private labels” in retail locations? For example, I can go to Whole Foods and they have their “Organic 365” line that includes all kinds of foods that I’m pretty sure they did not manufacture themselves.

In either case it’s a very interesting idea, and it’s cool that you’ve been successful at it. I think exposing people to different kinds of wines is always good, and if someone can pick up something cheaply, they’re more likely to take a chance on it, although it’s a shame that you don’t reveal the original producers, since I’m sure some customers would be intrigued enough to try the “real deal”.

Yes, its similar to some extent. There is probably some sort of agency behind the Whole Foods private label wines (yes they do their own private label wines) like Winery Exchange (http://www.wineryexchange.com/cgi-bin/wineryexchange/home.jsp)
They buy bulk wines and bottle them under various labels and they source globally as well. The key difference is that I source under my own label, I only buy high-end juice, I have virually no overhead, and I sell direct to Costco or consumer (Costco works on a 12-14% margins versus 33-40+% for most big retail grocery chains) which allows me to chop about 50-75% off what you would pay for the same juice under other labels. We recently sold a Napa Cab with a $42 price tag and a 92 score from a respected national publication on it for $13.99 in Costco.

As for naming the producers, it’ll never happen. My ability to continue doing this would be significantly diminished if I named my sources as it erodes their price points.

I didn’t mean to ruffle feathers, I have just never seen wine sold in this manner. I have nothing against your selling style, it was just something I had never seen / heard of before. I will head down to Costco and grab a bottle and check it out.

Wow, while I was off teaching a wine class last evening, lots happened here!

Thanks for clarifying, Craig and Cameron, about the sales tactics in the Costco stores. I still would like to witness it first-hand since it sounds like a Moroccan bazaar relocated to well-heeled parts of California–and perhaps beyond. Apologies for not recognizing the “beyond” part of the Costco relationship in the original posting. Clearly the wines are available in many key states (though sadly not my native New York). I adjusted the text above to reflect this.

And thanks, Cameron, for the elaboration on the differences with a typical private label from typical grocery store. Very helpful.

Congratulations on your rapid success and thanks for the 50% off shipping to my readers!

Sorry amigo but that was a one time deal. hit our website and you can read the story behind it. It was actually a discontinued single vineyard designate program sacrificed by the bean counters.

We do report to our mailing list when we have a wine that comes back around.

I think you would probably like Lot 31, which is a Sonoma Mtn Syrah we will release probably next week. Its a bit more extracted than the Lot 24 and just generally “bigger” and has an american oak influence versus the more subtle french oak you got in Lot 24.

OK, so I am a bit jadded here (living in the San Ramon/Danville area, where we seem to get first crack at all CH wines… YEAH!!!!!!)

I never miss a new lot and have found some great bottles from CH. Lots 25 & 30 (both Carneros region wines) hit grand slam home runs around here. We tasted L30 against a bottle of Rombauer and six folks around the table gave the CH the thumbs up. (And this is from the top selling market for Rombauer). L25 reminds me of a BV Sparkling Carneros that I last had over 10 years ago that we fell in love with.

I am sitting on >75 bottles of CH wines in storage and will continue to add to the collection.

I am in Bordeaux right now at VinExpo and am not sure as to the answer to your question. I am fairly certain our distribution is about to expand there. Can you hit http://www.chwine.com and send an email to our staff and we will figure it out when I return….I believe both stores will be receiving our product soon, probably the Lot 35 Cab.